Newcomers rarely make it into the winner’s circle at the All American Futurity, considered the Kentucky Derby of quarter horse racing.

Yet in September 2010, a beaming band of men waving Mexican flags and miniature piñatas swept into Ruidoso, N.M., to claim the million-dollar prize with a long-shot colt named Mr. Piloto.

Leading the revelry at the track was Mr. Piloto’s owner, José Treviño Morales, 45, a self-described brick mason who had grown up poor in Mexico. Across the border, Ramiro Villarreal, an affable associate who had helped acquire the winning colt, celebrated at a bar with friends.

As for the man who made the whole day possible, Miguel Ángel Treviño Morales, he was living on the run, one of the most wanted drug traffickers in the world.

Mr. Treviño, a younger brother of José Treviño, is second in command of Mexico’s Zetas drug trafficking organization, say law enforcement authorities on both sides of the border. Thin with a furrowed brow, he has become the organization’s lead enforcer — infamous for dismembering his victims while they are still alive.

The race was one of many victories for the Treviño brothers, who managed to establish a prominent horse breeding operation, Tremor Enterprises, in the United States that allowed them to launder millions of dollars in drug money, according to current and former federal law enforcement officials.

Using Miguel Ángel Treviño’s cash, José Treviño’s legal residency and Mr. Villarreal’s eye for a good horse, Tremor bought a sprawling ranch in Oklahoma and an estimated 300 stallions and mares. The Treviño brothers might have kept their operation quiet, given the criminal connection, but their passion for horses and winning apparently proved too tempting. In the short span of three years, Tremor won three of the industry’s biggest races, with prizes totaling some $2.5 million.

The business was “so far out there it’s hard to believe,” said Morris Panner, a former prosecutor who handled drug cases, and officials said it amounted to a foothold in the United States for one of Mexico’s most dangerous criminal networks. “Maybe they were using some kind of perverse logic that told them they could hide in plain sight, precisely because people wouldn’t believe it or question it,” Mr. Panner said.

The Justice Department moved against Tremor on Tuesday morning, dispatching several helicopters and hundreds of law enforcement agents to the company’s stables in Ruidoso and its ranch in Oklahoma. Jose Treviño and several associates were taken into custody and were expected to be charged later in the day, authorities said.

An affidavit prepared before the raids said the Zetas funneled about $1 million a month into buying quarter horses in the United States. The authorities were tipped off to Tremor’s activities in January 2010, when the Zetas paid more than $1 million in a single day for two broodmares, the affidavit said.

The New York Times became aware of Tremor’s activities in December 2011 while reporting on the Zetas. The Times learned of the government’s investigation last month and agreed to hold this story until Tuesday morning’s arrests.

Thompson explains how the Zetas have expanded their reach to South America and West Africa, while their stronghold is Nuevo Laredo, right across the US-Mexico border, with Miguel Ángel Treviño as their money manager. The Treviño brothers have been involved in the drug trade for at least two decades.